March 2016 - RIP Dodd Frank

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SERVICING
THE LATEST
HSBC Agrees to
Settle Abuse Claims
The bank consented to pay a bevy of state
and federal agencies $470 million to resolve
the mortgage-related allegations.
T
he Department
of Justice (DOJ)
announced that HSBC
Bank has reached a
settlement with several federal
agencies and almost every state
attorney general regarding
"mortgage origination, servicing,
and foreclosure abuses."
HUD, the Consumer Financial
Protection Bureau, and 49 state
attorneys general and the District
of Columbia's attorney general
were all other parties involved in
the settlement.
According to the DOJ, HSBC
has agreed to pay $470 million in
consumer relief and payments to
federal and state parties and will
now be bound to mortgage ser
-
vicing standards and be subject
to independent monitoring of its
compliance with the agreement.
"This agreement is the result
of a coordinated effort between
federal and state partners to
hold HSBC accountable for
abusive mortgage practices,"
said Acting Associate Attorney
General Stuart F. Delery. "The
Department of Justice remains
committed to rooting out finan
-
cial fraud and holding bad actors
accountable for their actions."
Principal Deputy Assistant
Attorney General Benjamin
C. Mizer, head of the Justice
Department's Civil Division,
noted," This settlement illustrates
the department's continuing
commitment to ensure respon
-
sible mortgage servicing. The
agreement is part of our ongoing
effort to address root causes of
the financial crisis."
"Even as the mortgage cri
-
sis recedes, the U.S. Trustee
Program will continue to combat
mortgage servicer abuse of the
federal bankruptcy laws so that
homeowners are given their legal
right to try to save their homes,"
said Director Cliff White of the
Justice Department's U.S. Trustee
Program. "Homeowners in finan
-
cial distress sometimes depend
on Chapter 13 bankruptcy to
help them catch up on their
payments. When banks violate
bankruptcy laws at the expense
of homeowners and other credi
-
tors, they must pay a price. This
settlement holds HSBC account-
able for its actions and helps
to protect the most vulnerable
homeowners."
The Federal Reserve also
hit HSBC with a $131 million
penalty "for deficiencies in resi
-
dential mortgage loan servicing
and foreclosure processing," ac-
cording to a separate, but related,
announcement on its site.
The Fed said that the penalty
reviewed HSBC's "unsafe and
unsound practices and fore
-
closure activities" and can be
resolved by "providing borrower
assistance or remediation in con-
junction with the Department of
Justice settlement or by provid-
ing funding for nonprofit hous-
ing counseling organizations."
If HSBC does not satisfy the
full penalty amount within two
years, the remaining amount
must be paid to the U.S.
Department of Treasury, the Fed
noted.
HSBC was not immediately
available for comment at the
time of publication.
According to the DOJ, under
the terms of the agreement in the
settlement, HSBC is required to:
• Pay $100 million: $40.5 million
to be paid to the settling federal
parties; $59.3 million to be paid
into an escrow fund admin
-
istered by the states to make
payments to borrowers who
lost their homes to foreclosure
between 2008 and 2012; and
$200,000 to be paid into an
escrow fund to reimburse the
state attorneys general for inves
-
tigation costs.